Monday, July 9, 2018

Question:

I input a value for my TFSA but for some reason it is not showing up on the asset accumulation table. Could not figure out why. Any suggestions, could I have a wrong setting somewhere?

As a follow up to my earlier question, in the file# below for some reason the TFSA balance and earnings are not showing up on the detailed accumulations table even though I input a 15k balance.

Answer:

Please set the savings plan allocation to max allowable TFSA, but the model does not direct excess cash flow to TFSA, but rather to the broader non-registered bucket. Is there something I am doing wrong?

You have to select TFSA as a source of retirement income on the Options page. I made this change to your file and now the TFSA numbers are showing in the results.

I looked at your file. For all years where you'll more than your goal, the excess is from non-registered investment income. So since the excess is not spent, there is no money to go to the TFSA.

The option to direct contributions in the TFSA is before retirement. After retirement, if there is an excess of income, it will be deposited in the TFSA if there is room available. If the excess is from non-registered investment income, the after-tax value stays invested in the non-registered account.

Monday, July 2, 2018

Question:

How do I enter the information to see the spouse's full name and my comments on the final report?

Answer:

On the Forecast page, on the General tab, select the Option to do a calculation for both spouses. The page will refresh and show a drop down box for selecting each spouse. Select 'Spouse (2)' and enter the spouse's name.

You can add plain text commentary in the report on the Report tab of the Options page.

Wednesday, June 27, 2018

Question:

I just signed up for the account and I am playing around with the numbers. I am currently keeping most of my earnings inside my corporation and investing inside the corporation.

Is there a way to measure the growth inside the corporation and the best way to divest in the future or is there an approximate account of how much extra tax I will be paying on withdrawing the money from the corporation so that I can properly account for it?

Answer:

You can enter the value of your corporation in 'Business Ownership' in Other Assets on the Finances page. You can pay dividends from the business and you'll find an entry for dividend income from business ownership on the 'Other Income' tab. The two are associated, so if you sell the business, the dividends will stop in that year.

On the sale of the business ownership, the amount above the small business capital gains exemption will be taxed.

Friday, June 22, 2018

Questions:

I modified the LIF payment, I had accidentally added the excess payment twice. which brings the LIF payment down several thousand dollars.

I still have the massive contradictory outcome of a 44 probability (Monte Carlo) and a $223,813 in her LIF at death.

Answers:

If you look at the second chart on the Income Forecast tab of the "View" page, you'll see that because LIF withdrawals are restricted by the maximum, the client cannot meet the retirement income goal from CPP, OAS and LIF.

Either you have to reduce the goal or find another source of income to make up the small shortfall each year.

The only cases where the Monte Carlo simulations succeed are those with very high returns and the high asset balances permit higher maximum withdrawals that together with CPP and OAS meet the goal. That's why the probability is low.

Saturday, June 16, 2018

Question:

It would be helpful to understand in some detail what the Retireware processing and assumptions are for the year of death. This is particularly so in the case of death of one spouse years before the other in a joint plan. I haven't come across this documented anywhere, and am having some difficulty interpreting our plan results.

There seem to be a range of options in the real world, particularly for the registered funds, which can be transferred to the surviving spouse without taxation.

I guess one approach for the program, the most conservative case, is to handle the death of one individual as an independent event - the remaining balance of registered funds are liquidated and the full value taxed, and the non-registered investments are liquidated and the realized capital gains taxed. The total resulting after tax value can then be handled in a variety of ways.

Then if by will and/or legal requirement some or all of that remainder is left to the surviving spouse, then that amount can be explicitly added by the user (ie me) back into the estate of surviving spouse as special case income.

In any event once I better understand what the program is assuming then I can do whatever is necessary to handle the numbers as per the will and estate plan.

Answer:

It's as you describe, on the first death, registered and locked-in funds flow tax-free to the surviving spouse. For non-registered funds and property other than the personal residence, the after-tax value goes to the surviving spouse. So it's assuming that the spouse leaves everything to his/her surviving spouse. There is no option in the program to allocate a portion of the estate currently.

Allow for multiple family members (husband/wife) and track them separately (especially for tax purposes)

Answers:

Yes, the tax calculations are accurate. The type of investment income calculated depends on your asset allocation. Based on this, the program allocates investment income among interest, dividends and realized and unrealized capital gains.

Your assets are divided according to type: registered, locked-in, TFSA and non-registered. You cannot enter each account separately (for example, if you have two RRSPs).

The program calculates other types of income such as pensions, CPP, OAS. However, it does not show separately the various types of investment income year by year, only as a whole.
You can do a combined plan for you and your spouse.

If you subscribe, you will get a refund within the first 30 days if it does not meet your needs. In order to get your refund, simply email support@retireware.com.

Thursday, June 7, 2018

Question:

I have a plan with locked-in funds under the New Brunswick pension legislation. It shows that LIF income will be over $12,000 in her first year of retirement, but the max allowable is around $8500 in for a NB legislated plan. Can you explain how the program appears to allow for more than the max allowable amount?

Answer:

The maximum is higher in 2017 because the program uses in this case the one-time maximum special withdrawal rule in New Brunswick pension legislation of the lesser of 3 times the maximum or 25% of the account value to meet the retirement income goal.

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RetireWare is a Web-based risk management and retirement planning software for individuals and financial advisors that's easy-to-use, full of rich visuals and comprehensive analysis. Try today and take advantage of our unconditional money-back guarantee. Know how much retirement income you can have. Build a plan and know where you stand.

Equisoft Inc.

Founded in 1994, Equisoft offers advanced digital business solutions to its clients in the insurance and wealth management industries to support their growth. The firm develops and markets innovative front-end applications (InsuranceElements and WealthElements) featuring industry-leading user interfaces and state-of-the-art technology.